Islamic finance is coming to Spain, where it estimates it will find a potential market of two million clients. According to financial newspaper Negocios, the Halal Institute – the centre of Islamic quality certification in Cordoba operating under the Spanish Islamic Commission – is shortly to sign an agreement with the Sa Nostra building society in the Balearic Islands for the creation of an Islamic current account.Les mer

Shaun Springer, Chief Executive of Napier Scott Search said, ‘Four years ago, you would have had difficulty finding sufficient Islamic Banking people to warrant a survey. This sector has grown to such a critical mass with every global, European and Arabic institution involved that it now justifies one.’

William Allum, who heads Napier Scott’s Middle East practice said, ‘We are seeing pay scale differentials favouring Islamic Banking because of a shortage of skilled, experienced staff. A managing director in Sharia’a structuring, for example, can expect to receive a combined salary and bonus of £275,000, whereas a similar post in say Russia would attract £200,000, a significant different.’Les mer

Islamic finance is on the rise in what in many parts of the world can be called an anti-Sharia age, and it has been proven compatible with Western financial systems and legislation. But challenges have still to be faced.Les mer

The global Islamic finance sector is set to continue its impressive growth into 2008, although this growth may be tempered by events completely out of its control. The downturn in the US economy, the dramatic slide of the US dollar, the slump in the US housing market and the anticipated correction in the UK and the impact of the credit crunch on the global banking system due to investments in collateralized debt backed by dodgy subprime US mortgage loans have not only seriously affected the leveraged debt market, the money borrowed especially by private equity companies to finance their takeovers in the industrialized countries but also the debt and capital markets in the Gulf Cooperation Council (GCC) countries.

The pricing for the $1 billion Dana Gas Sukuk issuance in the UAE, for instance, had to be delayed from July 2007 to October 2007 because of the impact of the credit crunch. Several GCC IPOs have similarly been delayed because of uncertain investors, Arab News reported. Islamic finance as a sector, despite its separate faith-based ethos, is not immune to the impact of the vagaries of the global financial system. It clearly cannot operate as if it were oblivious to what is happening in the conventional financial system. On the contrary, the cooperation and co-existence of the two systems is now the norm as pioneered by the Dual Banking Model of Malaysia.

Market growth of Islamic finance has been variously projected between 20 percent and 40 percent per annum. However, the absence of reliable data due to the lack of empirical research should precipitate caution, especially of those who like to talk up the sector beyond normal expectations. Growth per se is not an adequate indicator of the health of the sector. Talk of an estimated market size of over $500 billion and the existence of over 400 Islamic financial institutions worldwide, is meaningless if the impact of Islamic banking operations on the lives of millions of lay Muslims and the economies in which they live, is marginal.

At the World Islamic Banking Conference in Bahrain in December 2007, Adnan Al-Musallam, the chairman of The Investment Dar (TID), warned, “Islamic bankers need to be aware that we serve not only our shareholders and the bottomline, but a host of other stakeholders. This is what separates Islamic banking from Riba banking. Muslims too should not be asked to pay a premium for their religiosity. As such, cost of transaction, pricing, competition and service quality are just as important in the Islamic banking ethos as Shariah compliance, corporate governance and management ethics.” Al-Musallam was highlighting one of the core challenges facing Islamic finance in the coming year and beyond.

A new generation of Islamic bankers - highly educated, market savvy and oozing with creative energy and confidence - are determined to change the mindset of the Islamic finance industry from “Shariah-complaint” to “Shariah-based”. This is happening from New York to London to Bahrain and Dubai and Kuala Lumpur. This augurs well for the future of the sector, although some of those involved in the sector, whether Muslim or non-Muslim, remain cynical about such a change in mindset. But it raises the fundamental question whether Islamic finance should be integrated into the global financial system or whether it should co-exist as a parallel system of financial management, cooperating but notinteracting with the wider conventional system.

Al-Musallam does not favor integration. He evokes here the relevance of the concept of “Tawhid” (an overall vision, understanding and distinctiveness) in the Islamic economy. This, he advised, is created through a free market and widespread ownership of productive capital, bringing economic efficiency and establishing a direct connection between money supply and the real economy. Indeed, the development of money as a separate commodity rather than a measure of “economic capital”, he warned, “has brought about a state of confusion in the global financial system where the purchasing power of people is decreasing even though earnings in terms of “money” are increasing due to wage inflation.Islamic finance on the contrary brings discipline in the market by promoting the use of money as “capital” and availing it to entrepreneurs to bring efficiency and true returns to the providers of capital. “Many of the new generation of Islamic bankers believe that such a shift towards “Shariah-based” financing could contribute towards a revolutionary change in the global financial markets.Les mer

Islamic Shariah-compliant mortgages could be available in Canada through one of the major conventional banks as early as this summer, says a Toronto-based financial firm operating within the Muslim community.

“We’re confident by the summer time we will have a solution in place,” said Omar Kalair, chief executive officer of UM Financial Inc.

“We plan to launch with one of the big five banks a whole suite of products under the UM branded name, which will be structured to be Shariah compliant.”

Islamic financing, based on the principle that no interest is charged, is in its infancy in Canada, although widely available in the U.K. At least two U.S. banks currently offer Shariah mortgages.

To get around forbidden interest payments on loans, Shariah-compliant mortgages function by having the lender become an equity partner in a home purchase. The homeowner pays the financial institution putting up the rest of the purchase price monthly “rent” or “profit” payments, and principal.Les mer

Dubai plans to create the world’s largest Islamic bank within five years, spending as much as $1 billion on individual acquisitions in countries as far apart as Indonesia, Egypt and Britain, Noor Islamic Bank said.

Noor, which is 25 percent owned by the government of Dubai and 25 percent by the emirate’s ruler, plans to spend between $500 million and $1 billion each time on a “few” acquisitions in Europe, Asia and North Africa, Chief Executive Officer Hussain al-Qemzi told Reuters on Tuesday.

“We aim to be the largest Islamic bank within five years,” Qemzi said in his office in Dubai, two days after the lender officially started operations. “Acquisitions will be the main way because there is no time to grow organically,” he said.

Noor aims to be the world’s biggest Islamic bank by assets and countries of operation, with a focus on the largest Muslim nations such as Turkey, Egypt, Pakistan and Indonesia, Qemzi said.

Saudi Arabia’s Al Rajhi Bank, the world’s largest Islamic lender, had assets worth $33 billion at the end of September. Gold ETF: Dubai, the region’s gold trade hub, will see the launch of the Middle East’s first gold exchange traded fund (ETF) in 2008, a senior World Gold Council official said on Tuesday.Les mer

The global banking industry must start providing Sharia-compliant finance products to meet growing demand and to gain new customers, legislators must ensure a level playing field for Islamic finance, and European banking supervisors working with Basel II-derived rulings must ensure that the risk weights of Islam-compliant finance products are fair and correct.

Last week, Rudolf Böhmler, Executive Board member at Deutsche Bundesbank, told an audience at the 2nd Islamic Financial Services Forum, that Europe must accept the challenge of Islamic banking. Demand had skyrocketed – 25% of the world is now Muslim – and the banks had to accept that this demand was not only in the traditionalhigh net-worth market but was being fuelled by the growth of the Muslim middle-classes in Europe and other Western financial areas.

Böhmler used the UK as an example to show how a market for Sharia finance products can also function in non-Muslim countries… Les mer

Muslims in the United States number anywhere from 7 million to 10 million, and many are professionals, according to studies.

Yet for the majority, there are almost no outlets for their financing and in-vestment needs.

The reason is that Islamic law, or Shariah, doesn’t allow the charging or paying of interest, or investment in any industry involved in forbidden areas such as gambling, pornography, alcohol, tobacco or defense.

U.S. institutions have been slow to create an environment for developing Shariah-compliant instruments, due to a lack of legal and regulatory precedents, and a general lack of awareness, but not a lack of demand, observers said.

The pent-up demand is huge, said Akram Sheikh, senior vice president and chief financial officer of Anchor Finance Group in Hauppauge, N.Y., a Shariah-compliant business- and financial-consulting firm.Les mer

When we learn that Muslim Canadians want to start a sharia bank (a financial institution governed by Islamic religious law), our immediate reaction does not have to be that it’s one more assault on the Canadian way of life. Nor must we write it off as unpractical because Islam’s social ethic forbids charging interest on loans.

Let’s remember that chartered banks are already not the only options we have for financing ourselves. There can be room for one more. As well, let’s note that a ban on interest was imposed for centuries in Europe by both church and state. That ban is even as old as the Old Testament, which forbids Israelites from charging other Israelites interest.

So, this alternative way of financing one another has a long and diverse pedigree.

Subtle philosophical arguments against interest were advanced long ago by some of the West’s most respected thinkers, such as Aristotle and St. Thomas Aquinas. Medieval popes and church councils inveighed against it for more than 1,000 years. Penalties were often imposed against usurers, as all financiers were labelled if they charged interest. The idea may come as a shock to us in an age when paying interest is as much part of everyday life as borrowing money is. But if it’s new to most of us, it’s not new to history…Les mer

VANCOUVER, British Columbia, Sept 24 (Reuters) - Canada's banking regulator said on Monday it has received two applications from groups wanting to set up the first Islamic banks in the country, a small but growing industry in Western nations.Les mer